Words: Ashley Rigg
Published: 26th October 2009
Dubai: New developments not viable till 2012
New real estate projects will not be commercially viable in Dubai until 2012 due to weak demand and a glut of unsold inventory, consultants say.
The emirate is unlikely to see many project launches over the next two to three to years due to reduced investor appetite, a lack of financing and an oversupply of homes. Colliers International said earlier this month that one in four homes is vacant in Dubai and a quarter of office space lies empty.
Consultancy, Landmark Advisory warns that another 340,000 residential units will come on stream by the end of the year. “There is a surplus of apartments and commercial properties. Most people would prefer not to build until prices have picked up again,” Charles Neil, chief executive officer of Landmark Advisory, told Maktoob Business.
“It is clear that one of the major challenges relates to upcoming supply” adds Blair Hagkull, regional managing director of Jones Lang LaSalle. “The sheer volume of developments under construction that will be completed over the next two to three years is expected to exacerbate the situation,” he added.
Billions of dollars of projects were launched in Dubai in the last few years and prices doubled between the start of 2007 and mid-2008 before falling around 50% from their 2008 highs.
The Kuwait Financial Centre, also known as Markaz, put the number of real estate projects cancelled or on hold in the UAE at around $408 billion in September, up 18 percent from $346 billion in April.
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